The Iran nuclear negotiations — slow motion defeat for the U.S.

John Kerry reportedly is preparing to extend the deadline for negotiating a nuclear deal with Iran. Evidently, the two sides are too far apart to reach an agreement by the deadline date of Sunday, July 20. In fact, as Seth Mandel points out, they are sufficiently at loggerheads that they plan to stop talking before the deadline is reached.

Why are the two sides so far apart? Probably because Iran has no serious incentive to reach a deal.

America’s incentive to reach one is as strong as ever. Obama wants a piece of paper that he can tout as a foreign policy success. He also wants to preempt an Israeli attack against Iran by insisting that he has negotiated a satisfactory resolution. Israel is unlikely to put much faith in the piece of paper, but will be under immense pressure to “give peace a chance.”

By contrast, Iran’s incentive to reach a deal is now vastly diminished. The incentive that drove the mullahs to the bargaining table last year was the sanctions regime and its debilitating impact on the Iranian economy.

But thanks to the considerable relief President Obama granted Iran from sanctions last year, the Iranian economy has picked up substantially. Eli Lake reports that, according to a new study, Iran’s economy is now growing at a rate of about 2 percent per year. That’s a modest number, but a huge improvement over the 6.6 percent contraction of 2012-13.

The study estimates the value of Obama’s economic relief at $11 billion over the last six months. The value of the relief extends beyond the additional money Iran was permitted to obtain through oil sales and from the release of funds from global banks. According to Mark Dubowitz, author of the study, the de-escalation of sanctions has improved international sentiment towards the Iranian economy, thereby encouraging investors and bankers to risk doing business with Iran.

Dubowitz says that when these factors are taken into account, the overall value of the relaxed sanctions will likely exceed the $20 billion per year that he originally predicted.

With its economy recovering, Iran has little incentive to reach an agreement. In theory, Obama could try to revive the prior sanctions regime which, in theory, might reverse Iran’s economic recovery.

But Iran understands that (1) Obama is highly unlikely to walk away from the table, much less go back to square one with sanctions, since to do so would be to admit failure and (2) as we suggested at the time of the original deal, the old sanctions regime probably cannot be restored in any event given the need for international cooperation.

Thus it is not surprising that, in the words of a State Department official, “Iran has not moved from their—from our perspective—unworkable and inadequate positions that would not in fact assure us that their program is exclusively peaceful.” Why should they?

And so we’re left with the status quo, which is, by the State Department’s own admission “unworkable and inadequate.” As I said at the time the original deal was struck, “The mullahs got an easing of sanctions [and] retained their capacity to go nuclear in short order.”

Obama and Kerry blew it. Mandel concludes:

[They] had leverage: economic sanctions. They used up much of that leverage just to get the Iranians to the table, and now the Iranian leadership wants to run out the clock.

Thanks to the weakening of the sanctions, and the lack of stronger sanctions to begin with, they’re in a position to do so. And Kerry seems prepared to play along.